Kindergarten to College (K2C) - Eric

1 downloads 170 Views 734KB Size Report
Kindergarten to College (K2C). A First-in-the-Nation Initiative to Set All Kindergartners on the. Path to College. Leigh
New America Foundation Asset Building Program

Kindergarten to College (K2C) A First-in-the-Nation Initiative to Set All Kindergartners on the Path to College Leigh Phillips, San Francisco Office of Financial Empowerment Anne Stuhldreher, New America Foundation September 2011

In the Spring of 2011, the City of San Francisco automatically opened college savings accounts for over 1,000 San Francisco Kindergartners. The City also “seeded” every account with an initial deposit of $50. The account openings marked the official launch of San Francisco’s Kindergarten to College initiative, or “K2C.” This initiative, the first of its kind in the nation, aims to improve the odds for San Francisco Kindergartners and set all San Francisco public school children on a path to college, from the very first day of school. This case study provides an overview of Kindergarten to College (K2C), why city leaders started it, and how it works.

What Is Kindergarten To College?

secondary education. The hope is that as their savings grow,

The idea behind Kindergarten to College is relatively

so will their aspirations.

simple: to help families start saving earlier and to save more, by removing barriers to opening an account and

At full rollout, every child entering kindergarten in a San

providing incentives to spur contributions.

Francisco public school will have a college savings account automatically opened for them with a $50 deposit from the

Parents, friends, extended family and the students

City and County of San Francisco. Children enrolled in the

themselves will use their K2C account to save for post-

National School Lunch Program will receive an additional $50 deposit. K2C was piloted in the 2010-2011 academic

year with 1,200 students in 18 schools, representing 25

shocks; better health and education outcomes; and, the

percent of all kindergarten classes and will roll out to all

development of a “future orientation.”3

entering kindergartners—approximately 4,500 students per year—over the next two years.

New research shows that children with

Philanthropic and corporate foundations, community organizations, local businesses, and individuals have

savings accounts will be up to seven times

strengthened the appeal of the program by providing funds

more likely to attend college than those

for additional deposits and matching incentives to

without an account. This is true regardless of

encourage family savings and boost account balances.

the family’s income, race, or educational

Schools are integrating financial education—tied to the

attainment.

K2C account—into the K-12 math curriculum. We believe San Francisco will be the first city in the nation to integrate financial education that is linked to a real-life teaching tool in the form of the universal K2C account.

Why Did City Leaders Decide to Start K2C?

Too many San Francisco families have too little savings. San Francisco parents know they should be saving, but are not. One in three San Francisco children will be born into families with no savings or assets of any kind. This number

City leaders were compelled to create K2C when they

increases to one in two for Black and Latino children4. In a

learned that saving for college could make a critical

local survey, almost 100 percent of parents say they plan to

difference for San Francisco students. Six key findings

save for college, but only 50 percent are actually doing so5.

significantly impacted their decision:

Low-income families lack access to the savings products that build wealth. In San Francisco, 11 percent of families do

Savings—even small amounts—can improve the odds that San Francisco students will make it to college.

not have a checking account and more than 40 percent

New research shows that children with savings accounts those without an account.1 This is true regardless of the

College costs are skyrocketing and families will likely need to pay a bigger chunk of these costs than they have in the past.

family’s income, race, or educational attainment.

In 2009, the University of California Board of Regents

will be up to seven times more likely to attend college than

have a subprime credit score.6

approved a 32 percent increase in education fees. Even Emerging research also shows that savings has other

when factoring in grants and other waivers, the net cost of a

positive effects on children and their parents. Specifically,

year at a University of California or California State

2

University campus is one-third of the annual income for

savings is linked to increases in math scores among youth;

a greater sense of financial inclusion; greater financial literacy and fiscal prudence; protection against economic 1

Elliott, William and Sondra Beverly (2010). “The Role of Savings and Wealth in Reducing ‘Wilt’Between Expectations and College Attendance.” St. Louis: Center for Social Development. 2 Elliott III, William, Hyunzee Jung, and Terri Friedline (2010). Math Achievement and Children’s Savings: Implications for Child Development Accounts. Journal of Family and Economic Issues, 31, 171-184.

new america foundation

3

Scanlon, Edward and Deborah Adams. (2009). Do assets affect well-being? Perceptions of youth in a matched savings program. Journal of Social Service Research, 35, 33-46. 4 Asset Policy Initiative, Asset Poverty Index: Methodology, 2006 5 Data from a San Francisco Office of Financial Empowerment Survey of San Francisco parents, November 2009. 6 CFED: Building Economic Security in America’s Cities: New Municipal Strategies for Asset Building and Financial Empowerment, January 2011.

page 2

and fees have outpaced increases in student financial aid,

The K2C account will give teachers a powerful tool to teach students about money

both on the federal and state levels. For example, the

The financial crisis was partly a crisis of financial

maximum federal Pell Grant currently covers 35 percent of

illiteracy—many adults are ill-prepared to navigate the

average tuition, fees, and room and board at public four-

increasingly complex financial services landscape. Many

year colleges and universities nationwide. In 1987-88, the

students, however, learn nothing about money or finance in

maximum Federal Pell Grant covered 50 percent of public

schools. The K2C account will give teachers a powerful real

low-income households.7 In addition, increases in tuition

higher education

costs.8

world tool to teach students about savings, financial institutions, compound interest, and budgeting. Studies

A college degree is the price of admission to compete in the 21st century economy. But too many San Francisco students are not making it to college.

have suggested that financial education—which will be

The average salary of someone with a bachelor’s degree or

aptitude tests when they have owned a bank account or filed

higher is nearly three times higher ($1,150 per week) than

a tax return. 13

provided in schools in the K2C program—is more effective when paired with accounts and investments. Some studies have indicated that individuals score higher on financial

the earnings of a high school dropout ($444). 9 California is 2025. This lack of knowledge workers will be a drag on the

K2C can attract investments from businesses and foundations for San Francisco families.

California economy, according to the Public Policy Institute

City leaders hope that K2C accounts will be “magnets” that

projected to have a severe shortage of college graduates by

of

California.10

attract deposits and donations from local businesses, foundations, and individuals. K2C will leverage private

Like many cities, San Francisco struggles with a high

funds for savings matches, create behavioral incentives, and

dropout rate. In the San Francisco Unified School District

help families earn money for college at significantly higher

(SFUSD), the dropout rate is 17.9 percent for students

rates than they can earn by saving on their own.

overall, but 35.9 percent for Blacks and 21.8 percent for Latinos.11 Dropping out of high school has high costs—for

Finally, San Francisco is a good environment to pilot K2C.

the

The

The City has fewer children than most cities, a progressive

unemployment rate for high school dropouts is three times

political environment, and a growing gap between rich and

students

themselves

and

for

society.

as high as it is for Californians with a bachelor’s

degree. 12

poor families that is a citywide concern.

Where Did the Idea for K2C Originate? The idea of establishing a universal system of children’s 7

Jones, Jessika (2011). College Costs and Family Income: The Affordability Issue at UC and CSU. Sacramento: California Postsecondary Education Commission. 8 Baum, Sandy, Kathleen Payea and Patricia Steele (2009) . Trends in Student Aid. Washington, DC: The College Board. 9 U.S. Bureau of Labor Statistics. “Usual Weekly Earnings of Eage and Salary Workers, First Quarter 2011.” April 19th, 2011 10 Johnson, Hans (2010). Higher Education in Califonia: New Goals for the Master Plan. Public Policy Institute of California. 11 Data from the California Department of Education, Educational Demographics Unit. 12 California Unemployment Rates by Educational Attainment, 2009 Less than a high school diploma: 15.7% High school graduates 11.0% Bachelor’s Degree or Higher 4.5%

new america foundation

accounts at birth was first proposed by Professor Michael Sherraden in his seminal book, Assets and the Poor.14 He argued that these accounts could provide a foundation for lifelong asset accumulation as well as facilitate the delivery of basic financial education during the school years and jump-start the savings habit. 13

Johnson, Elizabeth and Margaret Sherraden (2006). From Financial Literacy to Financial Capability Among Youth. St. Louis: Washington University. 14 Sherraden, Michael (1991) . Assets and the Poor: A New American Welfare Policy.

page 3

Policymakers in the U.S. and abroad have advanced Children Savings Account (CSA) proposals based on Sherraden’s ideas. A proposal known as the ASPIRE Act would give each child born in the U.S. a savings account The account would be seeded with at least $500, and would serve as a magnet for additional contributions to help the child achieve significant life goals, such as obtaining a postsecondary education. The ASPIRE Act has been introduced in four consecutive congresses and has traditionally drawn bipartisan support. In addition, over 10 states currently match the deposits of low-income families in their 529

expenses. The number comes from the section of the

In San Francisco, starting the accounts in kindergarten made more sense than starting them at birth.

Internal Revenue code that covers these types of accounts.

K2C was originally inspired by Children’s Savings Account

In addition, there are several countries—Singapore, the

proposals and policies in the United States and abroad,

United Kingdom, Uganda, Canada, South Korea, Nigeria

where accounts would be automatically opened for

and others—that either offer CSAs at birth or for youth, or

newborns. City officials concluded this approach made

college savings plans.15 A 529 Plan is an investment plan offered by a state to help families save for future college

have experimented with offering them.

16

more sense at a national level than a local one. In

What Was Learned During the Planning Process? The City’s Office of Financial Empowerment, located in the

particular, officials worried about financial as well as logistical constraints, particularly due to the sizeable number of children that leave the city before enrolling in school.

Office of the Treasurer, and the Department of Children Youth and their Families, led the planning process. They

Working with schools and starting in kindergarten,

hired

Development

however, made a lot of sense. The population of San

(CFED)—a national organization with deep expertise in

Francisco schools is racially diverse, and the schools serve a

Children’s Savings Accounts—to lead the research and

mostly low- to moderate-income population (55 percent of

design work that would form the basis of K2C. They formed

SFUSD students receive free and reduced lunch). In

a planning committee that included relevant city staff from

addition, parents and children receive information through

the Mayor’s Office, San Francisco Unified School District,

schools and the city can access critical data and information

the Office of Financial Empowerment (SF OFE) and the

to aid program administration. Schools also provide a

Department of

Key

platform for children’s financial education. By introducing

nonprofits—including the New America Foundation and

the accounts in the classroom, the city can help the schools

EARN—also participated.

reinforce a college-going culture for all students.

the

Corporation

for

Children

Enterprise

Youth and

Families.

Below is a list of key conclusions that came out of the twelve-month planning process:

15

Data collected from The College Savings Plans Network. Zimmerman, Jamie (2008). Child Savings Accounts: A Primer. Washington: New America Foundation. 16

new america foundation

page 4

The K2C account requires unique features to make it work for the diverse San Francisco population.

college savings accounts affirms this aspiration with a

San Francisco’s school population includes a large

model also provides teachers with a classroom tool to teach

population of immigrants, ethnic minorities, and lower-

financial

income families. Many of these families are unfamiliar with

opportunity to consistently design lessons and curriculum

mainstream financial institutions and lack resources to save

to talk about savings and planning for college in the

for long-term goals. City leaders stressed the need for the

classroom would be lost. In addition, a universal model

K2C account to include features that would overcome

reduces administrative burden and cost.

demonstrated commitment from City leaders. A universal education.

Without

universal

access,

the

barriers faced by these populations. City leaders decided five features were essential:

The K2C accounts should be automatically opened. Other Children’s Savings Account initiatives require parents to voluntarily sign up, and, for a variety of reasons, have low take up rates, even when large incentives are

City leaders felt the seed deposit, set at $50, would send the right message to San Francisco families: “We’ll plant the initial seed, but it’s up to you to grow it.”

offered. For example, the State of Maine offers an initial deposit of $500 into all newborns’ 529 College Savings accounts, and has a 39 percent take-up rate amongst Maine

The City should seed every account with an initial deposit

parents.17

of public funds.

In addition, many parents, regardless of income,

fail to start saving early for college expenses due to inertia

City leaders felt the seed deposit, set at $50, would send the

and the sheer complexity of choosing an appropriate

right message to San Francisco families: “We’ll plant the

savings account. The City decided to automatically open

initial seed, but it’s up to you to grow it.” On a practical

accounts so all parents could participate. In San Francisco,

note, an initial deposit is required to open most accounts,

this meant opening accounts without social security

and this provided a straightforward way to open the

numbers (SFUSD does not collect this information from

accounts on day one. Finally, city leaders hope K2C will

students or parents) and without signed consent forms

help inform state and national Children’s Savings Account

from parents.

proposals, and an initial investment of public funds is an important feature of these policies.

The K2C program should be universal - all entering kindergartners and their families should receive the

K2C accounts should be progressively funded and provide

account regardless of income, documentation status or any

savings incentives and matches for parent and student

other determining factor.

savings, when possible.

The only requirement for participation is to be a

A primary goal of K2C is to level the financial playing field

kindergartner enrolled in a San Francisco public school. A

for San Francisco students. Larger initial deposits for lower-

universal approach provides equality of opportunity to all

income children would give a boost to families with less

children entering kindergarten in San Francisco public

ability to save. With this in mind, the City decided to offer

schools. College attendance is an aspiration for most

an additional $50 for children enrolled in the National

families and enrolling 100 percent of kindergartners in

School Lunch Program. Furthermore, providing savings matches (such as a dollar-for-dollar match up to a certain

17

Clancy, Margaret and Terry Lassar (2010). College Savings Plan Accounts at Birth: Maine’s Statewide Program. St. Louis: Washington University.

new america foundation

page 5

sum) has been shown to increase savings for lower income families.

18

opening accounts without requiring parents to submit significant paperwork to meet various Know Your Customer requirements from the USA PATRIOT Act; and

A broad range of deposit options should be available to

the possibility of opening accounts for undocumented

parents and students.

students, who would not have social security numbers.

Research done by the Brookings Institution in 2005

Despite the initial lack of interest, city leaders were

estimated that one in five San Francisco households—and

determined to find an account structure with the array of

half of the City’s Black and Latino households—did not

features necessary to make K2C work for all families and

have bank accounts.19 City leaders believed that, in order to

began working directly with major financial institutions

be successful, K2C must help parents overcome barriers to

that

using mainstream financial services. They wanted to make

programs, such as Bank On San Francisco.

had

supported

other

financial

empowerment

it as easy as possible for parents and students to make deposits. A range of options was necessary to achieve this goal, including the ability to make deposits online, but also

City leaders believed that, in order to be successful, K2C must help parents overcome

in person at conveniently located outlets, and by mail.

No savings product currently on the market could meet the goals of the program. The City initially hoped it could partner with Scholarshare, California’s 529 College Savings Plan. 529 plans exist in all 50 states and families investing in them often receive tax or

barriers

to

using

mainstream

financial

services. They wanted to make it as easy as possible for parents and students to make deposits.

other benefits as a feature of participation. Discussions revealed an incompatibility between the intent of the K2C program’s financial partner to provide the account features

Securing the necessary public funding required cultivation of a wide-array of constituencies.

the City was looking for, such as automatically opening

In order to be funded, the K2C proposal needed approval

accounts without a taxpayer ID number or written parental

from the San Francisco Board of Supervisors. A number of

consent. In addition, Scholarshare’s current financial

high-profile public sector leaders championed the proposal

partner provides only limited options for in-person

before the Board of Supervisors, including: then Mayor

contributions—there is currently only one downtown

Gavin

location in San Francisco, which does not accept cash.

Superintendent

program and the willingness and ability of Scholarshare

Newsom,

Treasurer Carlos

José

Garcia,

Cisneros,

Board

of

Schools Education

President Hydra Mendoza, and Maria Su, head of the City leaders then issued a Request for Qualifications (RFQ)

Department of Children Youth, and their Families. Two

to identify financial institutions that were interested in

members of the Board of Supervisors—David Campos and

partnering with the City to administer the K2C accounts.

then Supervisor Bevan Dufty—advocated for K2C funding

No financial institution responded. In particular, financial

to be included in the 2010-2011 budget. They described K2C

institutions

large

as a small investment in the first year, of a few hundred

numbers of accounts with small balances; automatically

thousand dollars, that would yield big returns for San

seemed

uninterested

in:

opening

Francisco school children and the school district. They 18

Sherraden, Michael and Julia Stevens, et al (2010). Lessons from SEED: A National Demonstration of Child Development Accounts. 19 Fellowes, Matt and Mia Mabanta: San Francisco’s Unbanked Population, August 2005 (Unpublished Memo prepared for the City of San Francisco)

new america foundation

emphasized that this small city investment would attract significant private dollars from philanthropic foundations,

page 6

businesses, and other donors. They were also careful to find

find solutions to legal constraints (mostly related to Know

general fund dollars to support K2C, so that the initiative

Your Customer and tax reporting requirements), and move

would not take money away from other projects for schools

through the City’s contracting process.

and youth. Finally, they were careful to ensure that the initial schools that would pilot K2C were evenly spread

While K2C accounts are automatically opened for all

throughout the city, so they would be in every Supervisor’s

parents

district. Beyond the leadership of the public sector,

opportunity to opt out. To date, less than one percent of

community groups also played a key role in letting

families have done so. The school district provides students’

supervisors know that there was broad support for K2C.

names, dates of birth and addresses to the Office of

and

kindergartners,

parents

are

given

an

Financial Empowerment to open accounts for every student

Parents were very interested in the accounts, but had a lot of questions.

who has not opted out. However, parents must sign data

In designing K2C, city officials talked with dozens of

release additional information about students such as

parents, individually and in various focus groups and other

enrollment in the National School Lunch Program. These

meetings. Parents were supportive and appreciative of the

consent

account, but had a lot of questions. Some of the most

University and EARN, to assess the effectiveness of K2C. In

common questions were: “Why even bother saving for

the first year, approximately 60% of parents signed the

college when I know I’ll never be able to afford it anyway?”

voluntary consent forms.

release consent forms, in order for the school district to

forms

also

allow

researchers,

at

Stanford

“What happens to my money if my kid doesn’t make it to college?” “Will saving in the K2C account disqualify my child for financial aid?” “What happens to my money if we move?” In response to these questions, a “Frequently Asked Questions” page was developed and featured prominently on the K2C website.

How is the K2C Account Set Up and What are the Rules? Despite the lack of response to the official RFQ, several banks stepped forward informally to offer to work with the City to develop a savings product that would meet the goals of the program. The City of San Francisco chose to partner with Citibank. Citibank had demonstrated support at high levels of the organization for children’s savings accounts, experience working with Individual Development Accounts (IDAs), and was flexible in designing the account solution. For example, they invested significant resources in the

The City owns the accounts on behalf of the parents and

development of an online portal so students could view

uses an escrow-based platform. The City is holding a

their savings. They also allow a wide range of ways for

master omnibus account with the City’s tax ID number. All

parents and students to make deposits (at local branches,

families enrolled in the program then have sub-accounts

online, and by mail). The City worked with Citi for six

with their kindergartner as the designated beneficiary.

months to negotiate the structure and terms of the account,

Family contributions are made to the sub-account, which

new america foundation

page 7

has a unique account number provided by Citibank on an

As the first program of its kind, program rules had to be

account card. Matches and incentives are tracked by ledger

created. The program used College Savings 529 account

and all deposits and matches can be viewed by families on

rules as a model, but faced additional challenges.

the online system. San Francisco officials selected this structure as the most workable one to automatically enroll

K2C accounts are “deposit only” accounts. No withdrawals

all kindergartners.

can be made from the K2C account unless they are qualified withdrawals, which include tuition for college,

The account structure has many advantages. It provides

community college, or other kinds of training programs.

parents who lack Social Security Numbers a safe place to

The account can also be used for books and other

save. Also, since the accounts are in the City’s name and

education-related expenses. All withdrawals must be made

not in the parent’s names, the savings will not affect their

prior to the student attaining the age of 25, although an

eligibility for public assistance programs, many of which

extension can be requested for those who serve in the

have limits on the amounts of savings parents can have

military or a similar national service program that may

before they lose eligibility. For example, CalWORKS

delay college attendance. If a student does not use the funds

(California’s name for its welfare program) has a $2,000

for post-secondary education, any family contributions are

savings limit that parents cannot exceed without losing

returned to the student. But the City deposits, philanthropic

benefits. Furthermore, by saving under the City’s tax ID

contributions, and growth amounts are forfeited. If a

number, the initial City deposit, the family savings and any

student leaves SFUSD they may still save in the account,

philanthropic contributions are protected from withdrawal

but will not receive matches and other incentives. All

and may only be used for post-secondary education. The

program rules are listed on the K2C website.

account is easy to use and families can make deposits by mail, online and by auto-deposit, or at any Citibank branch.

What Incentives Are Provided to Help Families Save?

There are disadvantages too. In order to avoid tax issues,

City leaders and program partners considered a variety of

the account does not earn interest. Instead sub-accounts are

incentives, and decided on the following structure for the

awarded a “growth amount”, similar to interest, but a

two-year pilot:

student will only receive the growth match if they use the funds for post-secondary education. The growth match is

An initial $50 deposit by the City into every account.

similar to money market rates, which can be very low. The

As mentioned previously, this gives all families a head start

City is implementing a plan to improve the growth

and facilitates the opening of the account.

potential of accounts by providing additional incentives in up to $2,500 a year, a cap designed to prevent the accounts

An additional $50 deposit by the City for students enrolled in the National Student Lunch Program.

being used as a tax shelter. Once deposits are made, they

These deposits give a boost to lower income families, an

cannot be withdrawn until they are used for post-secondary

important goal of K2C. Furthermore, this incentive helps

education–this includes family contributions. While this

the school district achieve a key goal of increasing

protects savings, it will also require gaining significant trust

participation in this program, since every eligible student

from families to believe that the City’s K2C account is a

that signs up for the National School Lunch Program

safe, reliable and competitive vehicle for their money.

brings additional federal dollars to schools.

the form of savings matches. Parents are allowed to deposit

new america foundation

page 8

A dollar for dollar match for every dollar deposited up to $100.

also want to assess the effectiveness of K2C’s marketing

This incentive is funded by private philanthropy. EARN, a

message and incentives have been understood by San

non-profit focused on asset building for low-income

Francisco families—and have motivated them to take the

families, agreed to raise these matching funds in the first

next step by participating and saving. As the City

year and other donors, such as the San Francisco

undertakes these evaluations, it can also determine whether

Foundation are raising money for future year matches.

K2C has begun to transform the financial capabilities of

and outreach efforts. We hope to determine that the

parents and the college aspirations of their students.

A $100 incentive for any parent that signs up to make automatic deposits into the account each month or makes monthly contributions for six months in a row. One of K2C’s key priorities is to encourage parents to establish a regular savings habit through automatic regular deposits. As this option may not be available to all families, the “Save Steady” bonus also rewards families for consistent saving. Private funds have been raised to support this incentive for years one and two. In the future, the City may deliver additional incentives

The City, EARN, and Stanford University will conduct a

through the accounts to help students achieve key goals.

broad and integrated research effort to answer these

Incentives will be linked to savings activity or educational

questions. Using an independent survey research firm, the

goals,

Financial

City and EARN will assess parents’ experiences with regard

Empowerment or the SFUSD. For example, the City is

to materials, messaging and branding, and attitudes and

considering providing a monthly or weekly incentive to

experiences about saving and college expectations. EARN,

boost attendance. Strong attendance during the initial years

with its extensive background in engaging with San

of school is a powerful predictor of how likely students are

Francisco families about savings, will conduct focus groups

to make it to college. The school struggles with some

with parents to expand on the quantitative findings and

children who are chronically absent. Emerging research

conduct one-on-one interviews with students about their

shows small incentives, $5 a week or month, for example,

future goals. The City, EARN, and Stanford University will

may boost attendance.

work to identify trends in account data, by tracking deposits

and

verifiable

by

the

Office

of

How Will K2C be Evaluated?

and other activities. Additionally, Stanford University plans to conduct interviews with teachers about the impact of the

Evaluating the outcomes and successes of the Kindergarten

K2C program and measure whether the $50 incentive for

to College program will be essential. The City needs to

free and reduced lunch students improved take-up. All of

confirm via independent research and analysis that the

these efforts will be conducted using the languages most

program design reaches children and families from a wide

spoken in San Francisco (English, Spanish, and Chinese).

range of backgrounds and is effective at encouraging what extent the initial spark provided by the City’s

Who are the Key Partners in K2C and What Roles do They Play?

contribution results in continued saving by families, and

Many people over many months worked on the design and

whether the design of the savings account works well. We

rollout of the K2C initiative. The effort included input from

savings. We hope to learn from these findings how and to

new america foundation

page 9

political, financial, and non-profit leaders, as well as

What are the Future Plans for K2C?

members of the school district itself.

The City and its partners aim to expand K2C to more students and build on it in ways that enhance its mission.

City Officials A variety of City officials play a role in K2C. The City’s

Achieve full rollout.

Office of Financial Empowerment, in the City Treasurer’s

Over the first two years, K2C will increase enrollment and

Office, led the start up and design of K2C and runs the

by 2012, K2C accounts will be provided for every

program on a daily basis. The Department of Children

kindergartner on the first day of school.

Youth and Families is a key advisor to the K2C and funds K2C. The Mayor and City Treasurer and other city leaders

Provide additional savings incentives.

used their “bully pulpit” to raise public awareness of K2C

The City plans to continue efforts to raise private funds. If

and to influence key stakeholders.

successful, the City would consider providing additional incentives to help families build savings.

San Francisco Unified School District The School District provides student data, informs parents

Expand savings options.

about the accounts, collects consent forms, and fields

The City is considering looking at expanded options for

questions. School secretaries, principals, teachers, parent

savings vehicles for every family that reaches $2,500 in

liaisons, and after school programs are involved in these

savings. For example, once a family reaches this benchmark

activities. Teachers teach financial education tied to the

they may no longer be eligible for matches but their

accounts by integrating it into the math curriculum. The

accounts could be transferred into an appropriate interest

School District also designed the curriculum, with

bearing account into which the family can continue to save.

assistance from CFED. Teachers share best practices and results through professional development workshops and

Implement the research and evaluation plan.

peer learning circles.

Over the next two years, the City and their research partners at EARN and Stanford University, will implement the

Citibank

program evaluation and begin analyzing and publicizing

Citibank holds the K2C Master Account that is in the City’s

the early results.

name and the subaccounts that are in students’ names. families to track their savings. They assist in the production

What Are the Key Challenges as K2C Moves Forward?

of program materials such as the account cards, and funded

Maximizing the impact of K2C will depend on identifying

the production of materials in the first two years.

and overcoming a few key challenges going forward. These

They created and maintain the online portal to allow

include engaging students and families as well as partner

Nonprofit partners

institutions (including political, financial, and non-profit),

CFED coordinated the planning process. EARN is providing

as well as administering the K2C accounts themselves.

matching funds in the first year and helping to evaluate

Significant challenges include:

K2C. The New America Foundation brought the initial Many community organizations are also getting the word

Keeping parents and students motivated and saving in the accounts.

out about K2C to their clients and networks.

The K2C team is implementing a marketing and outreach

concept to the City and plays an ongoing advisory role.

campaign whose goal is to encourage parents, students, and

new america foundation

page 10

others to make regular deposits. Grand, a San Francisco

the demand for philanthropic savings matches grows as the

creative agency, developed key messages and materials for

program expands. The City has formed a fundraising

the campaign, many of which appear throughout this case

committee for K2C and is exploring starting an endowment

study. K2C will reach parents through working closely with

to support the effort. So far, enthusiasm from funders is

school staff—teachers, parent liaisons, and secretaries who

high and matched funds are secured for the first two years.

staff school front offices. These staff will inform parents PTA meetings, after school programs, and classroom

A general willingness to retool approaches if they are not working.

events. Monthly mailings, electronic newsletters, volunteer

An initiative like K2C has never been attempted. It will

phone banking, and other reminders will be implemented

likely stumble at times. All of the partners will need to see

and focus group feedback will continue to refine marketing

mistakes as learning opportunities to retool and strengthen

messages.

approaches. In order to strengthen the feedback loop

and students about K2C through school events, such as

between parents and the K2C program, focus groups on the

Maintaining the momentum and commitment of all partner institutions.

product design and outreach strategy were conducted in

K2C will require the ongoing close collaboration of the

coordinated a “phone bank” to contact every enrolled

school district, City Hall, Citibank, and nonprofit partners.

student’s family. A “Teacher on Special Assignment”

To achieve this goal, the Office of Financial Empowerment

position has also been created at the school district to serve

formed a steering committee to bring the institutional

as a liaison between the K2C program and the participating

partners together every month to inform K2C on an

schools.

ongoing

basis.

Non-profit

partner

EARN

is

also

September 2011 and the United Way of the Bay Area

savers and K2C parents who can speak about the benefits of

What are the Key Recommendations for Other Cities?

matched savings programs.

Designing and implementing K2C required substantial

spearheading an advocacy effort involving EARN IDA

planning over many months between city officials, financial

Administering the accounts.

institutions, schools, students, and parents. The following

The K2C account structure is not an off-the-shelf product

is a set of recommendations to other cities with the desire

and has been designed to program specifications. The City

to undertake similar efforts.

has never administered a similar account program and is anticipating that challenges will arise in the day-to-day

Do your research.

management and tracking of the accounts. The City is

First, be clear about what problems you aim to solve. Then

mitigating these issues through the use of technology and

assess the suitability of Children’s Savings Account as a

the engagement of banking and investment staff from the

solution. A number of organizations have done research on

Treasurer’s Office.

Children’s Savings Accounts, conducted demonstration programs, and advance policies at the state and national

Maintaining funding for the accounts and matches for deposits.

level. The following organizations were instrumental in the

Like many cities, San Francisco faces occasional budget

efforts: CFED, EARN, the Asset Building Program of the

shortfalls. In addition, the number of students enrolled in

New

K2C increases exponentially as the program rolls out—1,100

Development (CSD) at Washington University at St Louis,

in year one, 3,500 in year two and 8,000 in year three—so

and the San Francisco Office of Financial Empowerment.

new america foundation

development of K2C and may be able to benefit similar America

Foundation,

the

Center

for

Social

page 11

Descriptions and their contact information are included at

any other individual. Reach out to other city and

the end of this report.

community leaders who work on children’s issues.

Allow for a planning process that engages key stakeholders.

Parents and students are the consumers of

We estimate that similar efforts to K2C could take 12 to 18

K2C. In order for the program to be

months to plan. Leadership from the school district, city government, community groups and parent representatives

successful it is critical to solicit their ideas

are all critical to developing a successful program.

about the program.

Choose an appropriate program design for your project.

Involve parents from the beginning.

San Francisco chose to pilot a universal, auto-enroll model

Parents ands students are the consumers of K2C. In order

for K2C. This program design was ambitious and caused

for the program to be successful it is critical to solicit their

challenges in data exchange, tax reporting, “know your

ideas about the program. For example, San Francisco

customer” requirements and other legal hurdles. It

conducted focus groups to understand the needs of parents,

required legal and financial expertise to resolve these

their preferences, and how to reach them. These efforts

issues. It is unclear if a program of this type can only be

included an informal survey of 200 parents, focus groups

executed by a government entity. However, other versions

in English, Spanish, and Cantonese, and meetings with

of children’s savings account programs exist, most of which

parent groups.

require voluntary signed consent from a parent to facilitate reach 100 percent take-up rates they can be easier to

Be ready to invest significant effort in the development of the savings account product.

administer and may allow for a broader range of account

The City and its partners didn’t seek to spend significant

options for families.

time designing a new account product. Unfortunately for

the opening of the accounts. While these programs will not

San Francisco, no account structure existed that would

Build champions in your local political leadership and reach out to key players.

work for the intent of the program and the diversity of San

Key stakeholders among public officials include Mayors,

values of a program, and see if there is an off the shelf

Treasurers, City Council Members, or Members of the

product available. As a first step, we would recommend

Board of Supervisors. Without the support of these officers

approaching a state’s 529 College Savings plan as a

and other local politicians it would be difficult to create a

potential

program like K2C. In addition to directing the levers of

adjustments to meet local needs these existing structures

government, they can help bring on other partners, give

may serve as an excellent host for accounts. This is

credibility to a new program, and attract media attention.

especially true for program designs that do not pursue an

Strong institutional and political support will be necessary

auto-enroll model.

Francisco families. It is important to assess the needs and

administrator

of

such

a

program.

With

to get such an effort off the ground and keep it moving. Educational leaders are a critical stakeholder as well—

The City’s negotiations with Citi lasted seven months and

administrators, principals, and teachers will have as much

involved challenging contract negotiations. Luckily, the San

impact on the day to day implementation of the program as

Francisco Treasurer’s Office, where the city’s Office of Financial Empowerment is housed, had deep expertise in

new america foundation

page 12

financial management and investments, the technological

County and the SFUSD. Program leaders originally

systems to develop a product of this kind, and attorneys

believed that as city and county agencies, the flow of data

with expertise in this area. Staff also had experience

and information between the school district and the

managing

Treasurer’s Office would be simple. However, the school

Individual

Development

Account

(IDA)

programs, which provide matched savings accounts and

district

financial education to low income people. Citibank proved

confidentiality rules that prevented the sharing of key

to be a willing and supportive partner, and dedicated

pieces of information, like student identification numbers,

significant resources. Outside attorneys provided pro bono

and enrollment in free and reduced price lunch without

advice and recommendations. However, the creation of this

parent permission. This increased the complexity of the

product and the administrative tools required to maintain

savings product design as it meant accounts had to be

this

of

opened with only three pieces of information—student

implementation and planning (on top of the original 12

name, address, and date of birth. The creation of the

month design phase).

consent form mitigated many of these issues. In year one of

program

on

the

back-end

took

months

is

bound

by

stringent

federal

and

state

the program, 60 percent of parents signed the consent

Identify the correct people at the school district and build buy in and ongoing commitment at multiple levels.

form and the City plans to improve on this number as the

Working within a public school system, even with full

and back to school nights.

commitment

from

SFUSD,

presented

program rolls out by further incorporating the consent form process into other school activities, like registration

unexpected

beyond the school administrators—such as principals,

Getting financial education into classrooms takes resources and follow through.

secretaries, parent liaisons, and the teachers themselves—

This does not happen by simply handing a curriculum

play a pivotal role in K2C and must be consistently

guide to someone in the schools district’s central offices.

engaged. For example, we observe that the number one

CFED worked with SFUSD to develop the kindergarten

factor to generate high-levels of parent engagement in the

curriculum for K2C. However, it was the dedication of the

program is enthusiasm from school secretaries and

elementary math curriculum director that got the materials

principals. The consent form return rate in schools with

embedded into lesson plans and teachers trained on how

engaged school site staff is as high as 90 percent, whereas

best to teach the materials. That position has since been

in schools with less engaged staff the percentages can be as

eliminated due to budget cuts and the K2C program has

low as 10 percent. To increase buy-in at each school site,

raised funds to create a half-time position of a “teacher on

K2C hosts regular trainings for secretaries, principals, and

special assignment” to ensure that K2C financial education

teachers. Program staff conduct school site visits to discuss

continues to be developed for future grade levels and

challenges and opportunities. As the program grows,

incorporated into lesson plans. K2C will also provide

keeping school site staff engaged will prove increasingly

funding for teacher professional development and learning

important to the success of the program.

communities to ensure teachers are sharing best practices

challenges and required creative solutions. Key players well

and talking about the program in the classroom.

Anticipate legal questions about the sharing of parent and student data.

Look for public and private funding sources.

The K2C program also faced unanticipated legal and data

The K2C planning process was supported with $120,000 in

exchange problems with the school district that necessitated

city funding. For the first year budget, the City will spend

the creation of legal agreements between the City and

$350,000. The City also receives private support for

new america foundation

page 13

marketing and outreach, evaluation, financial education and matching dollars and savings incentives. Despite this significant private support the K2C program is operating on a very lean budget and has only one full time employee,

Select Media Coverage of K2C 

Francisco Chronicle

although the city hopes to increase staffing through private support. The costs of K2C will grow each year as more and more parents open accounts and begin drawing down matching funds. We are exploring creating an endowment to permanently support K2C.

Conclusion While we won’t know the impact of K2C on college



City helps families save for college—CNN



New Programs Aim to Close the Wealth Gap— NPR



September of 2011, city officials attended dozens of back to school nights across San Francisco to share the details of K2C accounts directly with families. Parents asked

SF Creates City Funded Account for School Children— ABC News

attendance and completion for many years, the K2C program is already proving popular with parents. In

SF first U.S. city to start college savings plan—San



US Secretary of Education Announces Partnership between Department of Education, FDIC and NCUA

questions like “Is an account available for my other children?” “Are the incentives still available for my firstgrader?” “Are there additional investment options if I start saving?” and “How much can I contribute and how much match money can I receive?” What’s clear from these sessions is that parents appreciated the boost to help them start saving regularly for their children’s college education. If college tuitions continue to rise, families across the nation will need to save more than ever. City leaders hope families will live up to the K2C program tagline: Save Steady; Dream Huge.

new america foundation

page 14

Appendix: Resources and Key Contacts

help Californians build savings. More information is available online at www.assets.newamerica.net.

The Official K2C Website: www.k2csf.org The Corporation for Enterprise Development (CFED)

City of San Francisco Office of Financial Empowerment

CFED, which coordinated the SEED Initiative, is a national

The San Francisco Office of Financial Empowerment is

nonprofit that works to expand economic opportunities for

housed within the Office of the Treasurer and Tax Collector

low-income families. The SEED Initiative is the first

and operates the Kindergarten to College program, as well

nationwide demonstration of Children’s Savings Accounts,

as the City’s other groundbreaking financial empowerment

documenting the effects of savings upon aspirations and

initiatives, including Bank On San Francisco. The OFE

outcomes as children grow. More information is available

serves as a convener and influencer to further financial

online at www.seed.cfed.org.

empowerment

goals,

connecting

low-income

San

culturally relevant financial education to ensure success in

Center for Social Development at Washington University in St. Louis (CSD)

the mainstream. More information is available online at

Housed at the George Warren Brown School of Social

www.sfofe.org and www.k2csf.org.

Work, CSD creates and studies innovations in public policy

Franciscans to healthy financial products and providing

that enable individuals, families, and communities to

EARN

formulate and achieve life goals, and contribute to the

EARN is a nonprofit dedicated to helping low wage workers

economy and society. Through innovation, research, and

break the cycle of poverty and create new cycles of

policy development, CSD makes intellectual and applied

prosperity by integrating direct service, applied research,

contributions in social development theory, evidence,

and organizing key stakeholders to drive policy change that

community

bring best practices to scale. More information is available

emphasizes its role as a teaching institution, training

online at www.earn.org.

doctoral and master’s students through applied research projects.

projects,

More

and

information

public

is

policy. CSD

available

online

also

at

The New America Foundation's Asset Building Program

http://csd.wustl.edu/Pages/default.aspx.

As part of the Foundation’s work bringing new thinkers

About the Authors

and new ideas to the fore of public discourse in America,

Leigh Phillips is the manager of San Francisco’s Office of

the Asset Building Program develops policies and tools that

Financial Empowerment and led the startup of K2C. Anne

help low income people build wealth. The program’s

Stuhldreher is a Senior Policy Fellow at the New America

research has explored the potential of Children’s Savings

Foundation and helped develop the K2C concept and start

Accounts nationally and internationally The Asset Building

the program.

program also advances statewide policies in Sacramento to

new america foundation

page 15

© 2011 New America Foundation This report carries a Creative Commons license, which permits re-use of New America content when proper attribution is provided. This means you are free to copy, display and distribute New America’s work, or include our content in derivative works, under the following conditions: Attribution. You must clearly attribute the work to the New America Foundation, and provide a link back to www.Newamerica.net. Noncommercial. You may not use this work for commercial purposes without explicit prior permission from New America. Share Alike. If you alter, transform, or build upon this work, you may distribute the resulting work only under a license identical to this one. For the full legal code of this Creative Commons license, please visit www.creativecommons.org. If you have any questions about citing or reusing New America content, please contact us.

Main Office 1899 L Street, NW Suite 400 Washington, DC 20036 Phone 202 986 2700 Fax 202 986 3696

new america foundation

California Office 921 11th Street Suite 901 Sacramento, CA 95814 Phone 916 448 5189

page 16